In today’s fast-paced world, managing personal finances has become increasingly important. With the rise of mobile applications, individuals now have convenient tools at their fingertips to help them save and invest their money. Two popular apps that have gained significant attention in this field are Digit and Acorns. Both offer unique features and benefits, empowering users to take control of their financial goals. In this article, we will delve into the comparison between Digit vs Acorns and analyze their strengths and weaknesses to provide insights and help you determine which app might be the best fit for your financial needs.
Digit vs Acorns: Which App is the Best?
We will not just compare these two tools but also cover questions like is the Digit app worth it or what are the issues with the Acorns app and more. And hopefully, by the time this article ends, you will have two or at least one app that you can download on your phone and use for saving money.
What is Digit?
While it is clear that Digit is a money-saving app it is also an app that helps you budget and invests your money. The platform is soon going to rebrand itself to Oportun but what won’t change is its goal of helping people achieve financial health effortlessly while helping you guide your money in the right direction.
And it’s not just the app that this company offers to you, but they also have a VISA branded credit card for you and a deposit account that goes by the name of Direct. This app was founded in 2015 and has since then helped people collectively save over 7 billion dollars.
What is Acorns?
Acorns is a savings and investment app that also has VISA-branded debit cards and checking accounts to offer to its customers. When you use this app the share change that your return on your spending goes towards investments which is one way this app helps you make money.
The app also has expert-built portfolios to suggest to you to help you out with investment tracks. Not only this but also an automated retirement and a lot more stuff is up for grabs by signing up for this app. So far, the app has been used by at least 10 million people who have invested a combined sum of 15,00,00,00,000 dollars with the app. Let us begin our Digit vs Acorns comparison.
Digit vs Acorns
No matter what the secondary features of these apps are, the primary remains money-saving and both these apps can do that just the right way and so that is a reason enough to go ahead with a Digit vs Acorns comparison. So now we look at stuff that distinguishes or paints both these apps similar.
When it comes to requiring a minimum balance both these apps don’t require any amount of eligibility to be met. However, to start using Acorns you need to have some money in your account.
As a management fee Digit asks you for a monthly 5-dollar charge, with Acorns the monthly charge comes to between 1 and 3 dollars if you have invested less than a million dollars and there is no charge if you invest more than that. For a family account, the charge is 5 dollars a month.
Your account options with Digit are savings account, investment account, and retirement account which has both traditional and Roth options. With Acorns you have the option to get an investment account, checking account, and a retirement account with options of traditional, Roth, or SEP types. Digit is preferable for those that are interested in automatic savings as opposed to Acorns for those that are invested in automatic investments.
Features of Digit include saving money automatically for set goals within a set timeframe, having multiple portfolio options, making retirement contributions, saving bonuses, and covering overdrafts.
Features of Acorn include automatic investments that revolve around the round-up method, diversified portfolios, automatic contributors to retirement, offers on shopping, a metal debit card, and an investment account for kids.
The distribution of funds for IRA account holders is the same with both of these apps and taxes also work similarly for qualified IRA contributors using either app. So, all things considered Acorns emerges as the better app because it has a lesser monthly fee and offers more features to the users as well as account options but if you view Digit vs Acorns comparison strictly from the savings point of view then the former is the clear winner.
Is Digit Worth it?
Now since the article is focused on savings and Digit emerged as the better savings-oriented app of the two it is only sensible to ask the question, is Digit worth it? On the surface, the app appeared to be a better option for saving money and budgeting but what happens when we look at it under the microscope?
The app has received a combined 313k ratings on App Store and Google Play while making its way to the Forbes Advisors’ best budgeting apps list. Chase, Wells Fargo, BBVA, Luther Burbank, Bank of America, and Axos are partner banks of Digit, and since they are FDIC insured your money is insured up to 250k dollars.
Apart from this app uses machine learning to understand your spending habits and based on that it automatically saves your money by putting it in a savings account or retirement account. Also, if you save money for three consecutive months then you are paid a 0.3% APY for the money kept in your savings account.
While Digit clarifies that no data transmission or storage method is 100% secure, they use proper and full encryption when interacting with your financial institution. Also, we saw above in the Digit vs Acorns comparison that the app asks for a 5-dollar monthly charge, however, the app is free for the first 6 months. Digit matches you with diversified portfolios of ETFs based on your risk tolerance and goals.
Digit also stops you from contributing more than is allowed in the retirement account every year. The app also comes with an overdraft protection feature. In case an automated withdrawal sends your checking balance account under the minimum balance amount then the funds can be withdrawn from the Digit savings account to avoid overdraft charges.
If we talk about ratings, then on the App Store the app has a 4.7-star rating and on Google Play it has a 4.5-star rating. You can also use the app via desktop. All in all, if you look at Digit as it is supposed to be looked at, that is as a savings-oriented app that also helps you prepare a budget while also helping with investments and paying down debt then it surely is worth it.
For the subscription, the amount charged the app is also offering quite a few things all of which are pretty useful and so we don’t see an issue as to why you should use this app. Let us now take a look at some downside of acorns.
Downside of Acorns
Before we dive into it let us say that Acorns is not a bad app by any means and nor do we have any bias for Digit, but it is simply that the article is based on the savings aspect of these two apps, and since in the Digit vs Acorns, comparison the latter didn’t fare well in this particular area we have now arrived at the decision of looking for some of its other shortcomings.
Of all the things that users had a problem with, one was the fee. Though the fee charged by Acorns is less than what Digit charges you, the complaint is based on a different aspect. Most robo-advice apps usually charge you a perfect of your assets and not a flat fee which seems to be an issue as this fee can be higher than it should be especially if your account balance is low.
You are charged a fee for transferring your portfolio to another broker and that is a common practice. However, the issue here is that while other platforms here charge a flat fee, Acorns asks you for a charge per ETF so if one costs 50 then four costs 200 making transfers expensive.
Corporate bonds, government bonds, real estate, domestic large-cap stocks, emerging markets, international large-cap stocks, and small-cap stocks make up the 7 asset classes that you can invest in via this app. While that is enough diversification other apps that are similar to Acorns offer more such options to invest in which is why this is a downside of Acorns.
For all the features that Acorns has to offer, there are still a few things missing from it like they don’t provide you with a human investment advisor. They also don’t offer you tax-loss harvesting which many traditional brokers or even fintech companies provide you with. Also with Acorns, there is no 529 plan that is no qualified tuition program that can be useful for the user.
Can you Trust Digit?
If you combine the verdict of Digit vs Acorns comparison plus the worth it factor of Digit with Acorn’s shortcomings then this question should not even arise. Of course, Digit can and should be trusted for all the reasons that have been mentioned repeatedly throughout the article.
We saw above that Digit uses measures to safeguard your data as everything is encrypted. The app uses the latest security measures and goes up and above the standard to make sure your money is unharmed. Also, partners of Digit being FDIC insured should act as an added layer of comfort to your worries.
Digit also comes with an overdraft protection feature and if they accidentally cause your checking account balance to go lower than the minimum balance then they make sure to pay your overdraft charges from their pocket. With all these positive features and measures in place, there should be no reason for you to ask the question, can you trust Digit? And considering that all of this is available just by paying 5% dollars a month some would say that this app is a bargain.
Both Digit and Acorns offer valuable features for users looking to manage their finances efficiently. Ultimately, the best app choice depends on individual preferences and financial goals. Exploring each platform’s unique offerings and comparing them to personal needs can help users determine which app aligns better with their financial aspirations.